FILED: NEW YORK COUNTY CLERK 11/18/ :51 PM INDEX NO /2014 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 11/18/2014

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1 FILED: NEW YORK COUNTY CLERK 11/18/ :51 PM INDEX NO /2014 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 11/18/2014 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. and ILLINOIS NATIONAL INSURANCE COMPANY, Index No. Plaintiffs, -against- THE ROMAN CATHOLIC DIOCESE OF BROOKLYN; CITY OF NEW YORK, a municipal corporation; ADMINISTRATION FOR CHILDREN S SERVICES f/k/a Child Welfare Administration; ST. JOSEPH SERVICES FOR CHILDREN, INC. f/k/a Catholic Child Care Society of the Diocese of Brooklyn, Inc.; HEART SHARE HUMAN SERVICES OF NEW YORK, ROMAN CATHOLIC DIOCESE OF BROOKLYN, INC. f/k/a Catholic Guardian Society of the Diocese of Brooklyn, Inc.; SCO FAMILY OF SERVICES, INC. f/k/a St. Christopher-Ottilie; WESTCHESTER FIRE INSURANCE COMPANY, in its own capacity and as successor-in-interest to International Insurance Company; and THE NATIONAL CATHOLIC RISK RETENTION GROUP, INC. SUMMONS Venue is Based on Plaintiffs Residence Plaintiffs Demand Trial by Jury Defendants X TO THE ABOVE NAMED DEFENDANTS: YOU ARE HEREBY SUMMONED to answer the Complaint in this action and to serve a copy of your answer or, if the complaint is not served with this summons, to serve a notice of appearance on the undersigned within twenty (20) days after the service of this summons, exclusive of the date of service, or within thirty (30) days after the service is complete if this summons is not personally delivered to you within the State of New York, and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the Complaint.

2 Dated: Brooklyn, New York November 18, 2014 Jeffrey A. Mathews Law Offices of Michael F. Klag 12 MetroTech Center, 28th Floor Brooklyn, New York (718) Attorneys for Plaintiffs Of Counsel: Matthew J. Fink (pro hac vice to be filed) Charles A. Hafner (pro hac vice to be filed) NICOLAIDES FINK THORPE MICHAELIDES SULLIVAN LLP 71 S. Wacker Drive, Suite 4400 Chicago, Illinois Telephone: (312) Counsel for Plaintiffs To: The Roman Catholic Diocese of Brooklyn 310 Prospect Park West Brooklyn, New York The City of New York c/o Corporation Counsel 100 Church Street New York, New York Administration for Children s Services 150 William Street New York, New York 10038

3 St. Joseph Children s Services Adoptive Parent Group, Inc. a/k/a St. Joseph Services for Children, Inc. c/o Office of the New York Department of State One Commerce Plaza 99 Washington Avenue Albany, New York Heart Share Human Services of New York, Roman Catholic Diocese of Brooklyn, Inc. c/o Office of the New York Department of State One Commerce Plaza 99 Washington Avenue Albany, New York SCO Family of Services, Inc. c/o Office of the New York Department of State One Commerce Plaza 99 Washington Avenue Albany, New York Westchester Fire Insurance Company c/o New York State Department of Financial Services Office of General Counsel One State Street New York, New York 10004

4 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. and ILLINOIS NATIONAL INSURANCE COMPANY, Index No. Plaintiffs, -against- COMPLAINT THE ROMAN CATHOLIC DIOCESE OF BROOKLYN; CITY OF NEW YORK, a municipal corporation; ADMINISTRATION FOR CHILDREN S SERVICES f/k/a Child Welfare Administration; ST. JOSEPH SERVICES FOR CHILDREN, INC. f/k/a Catholic Child Care Society of the Diocese of Brooklyn, Inc.; HEART SHARE HUMAN SERVICES OF NEW YORK, ROMAN CATHOLIC DIOCESE OF BROOKLYN, INC. f/k/a Catholic Guardian Society of the Diocese of Brooklyn, Inc.; SCO FAMILY OF SERVICES, INC. f/k/a St. Christopher-Ottilie; WESTCHESTER FIRE INSURANCE COMPANY, in its own capacity and as successor-in-interest to International Insurance Company; and THE NATIONAL CATHOLIC RISK RETENTION GROUP, INC. Defendants X National Union Fire Insurance Company of Pittsburgh, Pa. ( National Union ) and Illinois National Insurance Company ( Illinois National ), for their Complaint against the Roman Catholic Diocese of Brooklyn ( Diocese ); the City of New York ( City ); Administration for Children s Services f/k/a Child Welfare Administration ( ACS ); St. Joseph Services for Children, Inc. f/k/a Catholic Child Care Society of the Diocese of Brooklyn, Inc. ( SJSC ); Heart Share Human Services of New York, Roman Catholic Diocese of Brooklyn, Inc. f/k/a Catholic Guardian Society of the Diocese of Brooklyn, Inc., ( HHS ); SCO Family of Services, Inc. f/k/a St. Christopher- Ottilie ( SCO ); Westchester Fire Insurance Company ( Westchester ), in its own capacity and as successor-in-interest to International Insurance Company ( International ); and The National 1

5 Catholic Risk Retention Group, Inc. ( NCRRG ) state as follows: THE PARTIES 1. Plaintiff National Union is a corporation organized under the laws of Pennsylvania, with a principal place of business in New York, New York. 2. Plaintiff Illinois National is a corporation organized under the laws of Illinois, with a principal place of business in New York, New York. 3. Upon information and belief, Defendant City is a municipal corporation, organized under the under the laws of New York. 4. Upon information and belief, Defendant ACS is an agency of Defendant City and authorized by New York state law to care for children in foster care. Together, Defendants City and ACS are referred to herein as the City Defendants. 5. Upon information and belief, Defendant Diocese is a not-for-profit corporation organized under the laws of New York. 6. Upon information and belief, Defendant SJSC is a not-for-profit corporation organized under the laws of New York and affiliated with the Diocese. 7. Upon information and belief, Defendant HHS (named in the Underlying Lawsuit as Heartshare Human Services f/k/a Catholic Guardian Society of the Diocese of Brooklyn, Inc. ) is a notfor-profit corporation organized under the laws of New York and affiliated with the Diocese. 8. Upon information and belief, Defendant SCO is a not-for-profit corporation organized under the laws of New York and affiliated with the Diocese. Together, Defendants SJSC, HHS, and SCO are referred to herein as the Diocese Defendants. 9. Upon information and belief, Defendant Westchester is a corporation organized under the laws of New York, with a principal place of business in Pennsylvania. 10. Upon information and belief, International was an Illinois corporation licensed to issue insurance policies. Upon information and belief, the interests of International were assumed by or 2

6 transferred to other insurance companies, including Defendant Westchester, between 1993 and Upon information and belief, Defendant NCRRG is a corporation organized under the laws of Vermont, with a principal place of business in Vermont. JURISDICTION AND VENUE 12. This Court has jurisdiction over the subject matter of this action because National Union, Illinois National, International, Westchester and NCRRG have transacted and/or are transacting business within the State of New York. 13. This Court has jurisdiction over the subject matter because the City Defendants, Diocese, and Diocese Defendants reside in the State of New York. 14. Venue is proper in this County pursuant to CPLR 503(a) based on Plaintiffs residence. THE UNDERLYING LAWSUIT 15. The Diocese Defendants and the City Defendants were defendants in an underlying lawsuit filed in the U.S. District Court for the Eastern District of New York, Case No. 1:09-cv ENV-MDG, captioned S.W. et al. v. City of New York et al. (the Underlying Lawsuit ). A copy of the Complaint filed in the Underlying Lawsuit is attached as Exhibit A. 16. The Underlying Lawsuit alleged that the City Defendants were authorized to care for children in foster care in the State of New York. The Underlying Lawsuit alleged that the Diocese Defendants were authorized agencies as defined in New York Social Services Law 371 and were under contract with the City Defendants to provide foster care for children removed from their homes and placed in the custody of the City. 17. The Underlying Lawsuit sought damages against the City Defendants and the Diocese Defendants on behalf of ten individuals (the Claimants ) who, at various times between 1986 and 1994, were placed as foster children with Judith Leekin ( Leekin ). 3

7 18. The Claimants were identified in the Underlying Lawsuit by their initials, and were allegedly placed with and adopted by Leekin on the following dates: a. S.B. was placed with Leekin by SCO on May 9, 1986, and adopted by Leekin on July 28, 1988; b. L.J. was placed with Leekin by the City Defendants on March 17, 1988 and adopted by Leekin on May 31, 1993; c. J.G. was placed with Leekin by the City Defendants on September 30, 1988 and adopted by Leekin on May 31, 1993; d. S.W. was placed with Leekin by SJSC on June 28, 1989 and adopted by Leekin December 13, 1994; e. R.E. was placed with Leekin by SJSC on March 27, 1992 and adopted by Leekin on June 20, 1995; f. J.B. was placed with Leekin by SJSC on December 5, 1992 and adopted by Leekin on June 7, 1994; g. C.B. was placed with Leekin by SJSC on December 5, 1992 and adopted by Leekin on June 7, 1994; h. T.G. was placed with Leekin by SJSC on December 5, 1992 and adopted by Leekin on June 7, 1994; i. T.L. was placed with Leekin by HHS on July 15, 1994 and adopted by Leekin on April 16, 1996; and j. J.L. was placed with Leekin by HHS on July 15, 1994 and adopted by Leekin on April 16, The Underlying Lawsuit alleged that the City Defendants were responsible for placing L.J. and J.G. in the Leekin home. The Underlying Lawsuit alleges that the remaining eight Claimants S.B., S.W., R.E., J.B., C.B., T.G., T.L. and J.L. were placed in the Leekin home by the following Diocese 4

8 Defendants: a. S.B. was placed in Leekin s care by SCO; b. S.W. was placed in Leekin s care by SJSC; c. R.E. was placed in Leekin s care by SJSC; d. J.B. was placed in Leekin s care by SJSC; e. C.B. was placed in Leekin s care by SJSC; f. T.G. was placed in Leekin s care by SJSC; g. T.L. was placed in Leekin s care by HHS; and h. J.L. was placed in Leekin s care by HHS. 20. The Underlying Lawsuit alleged that Leekin used a the following fictitious identities to foster and subsequently adopt the Claimants for the sole purpose of collecting special needs subsidies provided for their care: a. With SCO, Leekin claimed to be Anne Marie Williams; b. With SJSC, Leekin claimed to be Michelle Wells; c. With HHS, Leekin claimed to be Eastlyn Giraud; and d. With the City Defendants, Leekin claimed to by Cheryl Graham. 21. The Underlying Lawsuit alleged that the Claimants each, individually and separately, suffered horrific abuse and neglect while in the care of Leekin. It is alleged that each of the Claimants, individually and separately, were beaten, handcuffed, zip-tied, humiliated, threatened, secreted from the public, locked up in a basement or garage, deprived of education, denied medical treatment and starved while in Leekin s care. 22. The Underlying Lawsuit alleges that the Claimants remained in Leekin s custody until the State of Florida rescued them on July 10, In November 2012, the City Defendants agreed to pay $9.7 million to settle all claims against them in the Underlying Lawsuit. 5

9 24. In June 2014, with consent of the Diocese Defendants, National Union and Illinois National agreed to advance $17.5 million to settle all claims asserted against the Diocese Defendants in the Underlying Lawsuit. 25. Various disputes have arisen between and among National Union and Illinois National on the one hand, and the Diocese Defendants and the City Defendants on the other hand, relative to their respective rights, duties and obligations under the Primary Policies relative to the Underlying Lawsuit. THE POLICIES 26. National Union and Illinois National issued a series of Commercial General Liability (CGL) Policies to the Diocese that were in effect between September 1, 1985 and August 31, 2001 (the Primary Policies ): a. National Union Policy No. GL , effective between September 1, 1985 and September 1, 1986 ( 1985 Policy ); b. National Union Policy No. GL , effective between September 1, 1986 and September 1, 1987 ( 1986 Policy ); c. National Union Policy No. GL , effective between August 31, 1987 and August 31, 1988 ( 1987 Policy ); d. National Union Policy No. GL , effective between August 31, 1988 and August 31, 1989 ( 1988 Policy ); e. National Union Policy No. GL , effective between August 31, 1989 and August 31, 1990 ( 1989 Policy ); f. National Union Policy No. GL , effective between August 31, 1990 and August 31, 1991 ( 1990 Policy ); g. National Union Policy No. GL , effective between August 31, 1991 and August 31, 1992 ( 1991 Policy ); 6

10 h. National Union Policy No. GL , effective between August 31, 1992 and August 31, 1993 ( 1992 Policy ); i. National Union Policy No. GL , effective between August 31, 1993 and August 31, 1994 ( 1993 Policy ); j. National Union Policy No. GL , effective between August 31, 1994 and August 31, 1995 ( 1994 Policy ); k. National Union Policy No. GL , effective between August 31, 1995 and August 31, 1996 ( 1995 Policy ); l. National Union Policy No. GL , effective between August 31, 1996 and August 31, 1997 ( 1996 Policy ); m. National Union Policy No. GL , effective between August 31, 1997 and August 31, 1998 ( 1997 Policy ); n. Illinois National Policy No. GL , effective between August 31, 1998 and August 31, 1999 ( 1998 Policy ); o. Illinois National Policy No. GL , effective between August 31, 1999 and August 31, 2000 ( 1999 Policy ); and p. Illinois National Policy No. GL , effective between August 31, 2000 and August 31, 2001 ( 2000 Policy ). 27. Upon information and belief, NCRRG issued five primary policies to the Diocese that were in effect between August 31, 2001 and August 31, 2006 (the NCRRG Primary Policies ): a. NCRRG Policy No. RRG-1058, effective between August 31, 2001 and August 31, 2002; b. NCRRG Policy No. RRG , effective between August 31, 2002 and August 31, 2003; c. NCRRG Policy No. RRG , effective between August 31, 2003 and August 31, 7

11 2004; d. NCRRG Policy No. RRG , effective between August 31, 2004 and August 31, 2005; and e. NCRRG Policy No. RRG , effective between August 31, 2005 and August 31, National Union also issued a series of Commercial Umbrella Policies to the Diocese that were in effect between September 1, 1985 and August 31, 1991 (the National Union Umbrella Policies ): a. National Union Policy No. BE , effective between August 31, 1985 and August 31, 1986; b. National Union Policy No. BE , effective between August 31, 1986 and August 31, 1987; c. National Union Policy No. BE , effective between August 31, 1987 and August 31, 1988; d. National Union Policy No. BE , effective between August 31, 1988 and August 31, 1989; e. National Union Policy No. BE , effective between August 31, 1989 and August 31, 1990; and f. National Union Policy No. BE , effective between August 31, 1990 and August 31, Upon information and belief, International issued five excess or umbrella policies to the Diocese that were in effect between August 31, 1991 and August 31, 1994 and between August 31, 1996, and August 31, 1997 (the International Umbrella Policies ): a. International Policy No , effective between August 31, 1991 and August 31, 1992; b. International Policy No , effective between August 31, 1992 and August 8

12 31, 1993; c. International Policy No , effective between August 31, 1993 and August 31, 1994; d. International Policy No. CUA , effective between August 31, 1996 and August 31, 1997; and e. International Policy No. CUA , effective between August 31, 1997 and August 31, Upon information and belief, the interests of International under the International Umbrella Policies were legally transferred to Westchester by valid novation or otherwise. Upon information and belief, Westchester accepted responsibility for International s liability under the International Umbrella Policies and agreed to pay any claims or losses covered under those policies directly in its own name or on International s behalf. 31. Upon information and belief, Westchester issued five excess or umbrella policies to the Diocese that were in effect between August 31, 1994 and August 31, 1996 and between August 31, 1998 and August 31, 2001 (the Westchester Umbrella Policies ): a. Westchester Policy No. CUA , effective between August 31, 1994 and August 31, 1995; b. Westchester Policy No. CUA , effective between August 31, 1995 and August 31, 1996; c. Westchester Policy No. CUA , effective between August 31, 1998 and August 31, 1999; d. Westchester Policy No. CUA , effective between August 31, 1999 and August 31, 2000; and e. Westchester Policy No. CUA , effective between August 31, 2000 and August 31,

13 32. Upon information and belief, NCRRG issued five excess or umbrella policies to the Diocese that were in effect between August 31, 2001 and August 31, 2006 (the NCRRG Umbrella Policies ): a. NCRRG Policy No. XS-1058, effective between August 31, 2001 and August 31, 2002; b. NCRRG Policy No. XS , effective between August 31, 2002 and August 31, 2003; c. NCRRG Policy No. XS , effective between August 31, 2003 and August 31, 2004; d. NCRRG Policy No. XS , effective between August 31, 2004 and August 31, 2005; and e. NCRRG Policy No. XS , effective between August 31, 2005 and August 31, Upon information and belief, between August 31, 2006 and August 31, 2007, the Diocese was self-insured for the first $5 million of any liability that would otherwise be covered under a CGL policy. Alternatively, NCRRG may have issued primary and umbrella/excess policies to the Diocese that were effective between August 31, 2006 and August 31, Coverage under the Primary Policies applies only to bodily injury that takes place during the policy period and is caused by an occurrence. Specifically, the 1985 Policy, 1986 Policy, 1987 Policy, 1988 Policy, 1989 Policy, and 1990 Policy provide: I. COVERAGE A BODILY INJURY LIABILITY The company will pay on behalf of the insured all sums which the Insured shall become legally obligated to pay as damages because of: A. bodily injury * * * to which this insurance applies, caused by an occurrence 35. The 1985 Policy defines bodily injury as bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom. The 10

14 1986 Policy, 1987 Policy, 1988 Policy, 1989 Policy, and 1990 Policy define bodily injury as bodily injury, sickness, mental injury, anguish, shock, humiliation or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom. 36. The 1991 Policy, 1992 Policy, 1993 Policy, 1994 Policy, 1995 Policy, 1996 Policy, 1997 Policy, 1998 Policy, 1999 Policy, and 2000 Policy provide: SECTION I COVERAGES COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY 1. Insuring Agreement a. We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury to which this insurance applies. b. This insurance applies to bodily injury only if: (1) The bodily injury is caused by an occurrence that takes place in the coverage territory; and (2) The bodily injury occurs during the policy period. 37. The 1991 Policy and 1992 Policy define bodily injury as bodily injury, sickness, mental injury, anguish, shock, humiliation or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom. The 1993 Policy, 1994 Policy, 1995 Policy, and 1996 Policy define bodily injury as bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time. The 1997 Policy, 1998 Policy, 1999 Policy, and 2000 Policy define bodily injury as bodily injury, sickness, mental anguish, mental injury, shock, humiliation or disease sustained by any person, including death at any time resulting therefrom. 38. The Primary Policies each contain a substantially similar definition of occurrence. The 1985 Policy and 1986 Policy define occurrence as an accident, including continuous, intermittent or repeated exposure to conditions, which results in bodily injury neither expected nor intended from the standpoint of the insured. The 1987 Policy, 1988 Policy, 1989 Policy, and 1990 Policy 11

15 define occurrence as an accident, including continuous or repeated exposure to conditions, which results in bodily injury neither expected nor intended from the standpoint of the insured. The 1991 Policy, 1992 Policy, 1993 Policy, 1994 Policy, 1995 Policy, 1996 Policy, 1997 Policy, 1998 Policy, 1999 Policy and 2000 Policy define occurrence as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. 39. Coverage under each of the Primary Policies applies in excess of a $250,000 selfinsured retention (SIR) that applies separately to each occurrence causing bodily injury. Specifically, the 1985 Policy, 1986 Policy, and 1987 Policy provide: In consideration of the premium charged it is hereby agreed that coverage as is afforded by this policy shall be excess of a $250,000 Self Insured Retention each occurrence (as defined herein), including any amounts payable under the supplementary payments section of this policy. The remaining Primary Policies - the 1988 Policy, 1989 Policy, 1990 Policy, 1991 Policy, 1992 Policy, 1993 Policy, 1994 Policy, 1995 Policy, 1996 Policy, 1997 Policy, 1998 Policy, 1999 Policy, and 2000 Policy - provide: In consideration of the premium charged, it is agreed that the limits of insurance for each of the coverages provided by this policy will apply excess of a $250,000 selfinsured retention (hereinafter referred to as the Retention Amount ) The Retention Amount (a) Shall apply only to Occurrences covered under this policy; and (b) Shall apply separately to each such Occurrence; and (c) Shall include all amounts under the supplementary payments section of the policy. 40. Each of the Primary Policies defines insured to include entities for whom the named insured has agreed to provide coverage in a written contract or agreement, but only for that entity s liability arising out of the named insured s operations. The 1985 Policy, 1986 Policy, 1987 Policy, 1988 Policy, 1989 Policy, 1990 Policy, 1991 Policy, 1992 Policy, 1993 Policy, 1994 Policy, 1995 Policy,

16 Policy, and 1997 Policy provide: It is also agreed that the unqualified word Insured[ 1 ] wherever used in this insurance includes not only the Named Insured but also any organization to whom the Named Insured is obligated by virtue of written contract or agreement to provide insurance, such as is afforded by this insurance, but only with respect to operations by or on behalf of the Named Insured, or out of the facilities owned or used by the Named Insured. The 1998 Policy, 1999 Policy, and 2000 Policy provide: Named Insured also includes any organization to whom the Named Insured is obligated by virtue of oral or written contract or agreement to provide insurance, such as is afforded by this insurance, but only with respect to operations by or on behalf of the Named Insured, or out of the facilities owned or used by the Named Insured. 41. Other than the 1985 Policy, each of the Primary Policies precludes coverage for liability due to the rendering or failure to render professional services. The 1986 Policy, 1987 Policy, 1988 Policy, 1989 Policy, and 1990 Policy each contain a Malpractice and Professional Services Exclusion endorsement that provides: It is agreed that with respect to any operation described above or designated in the policy as subject to this endorsement, the insurance does not apply to bodily injury due to the rendering or failure to render any professional service. The 1991 Policy, 1992 Policy, 1993 Policy, 1994 Policy, 1995 Policy, 1996 Policy, 1997 Policy, 1998 Policy, 1999 Policy and 2000 Policy each contain a Professional Services Exclusion endorsement that provides: With respect to any professional services shown in the Schedule, this insurance does not apply to bodily injury due to the rendering or failure to render any professional service. 42. Each of the Primary Policies provides, as a condition of coverage, that an insured will not, except at its own cost, voluntarily make any payment or assume any obligation without National 1 The 1985 Policy, 1986 Policy, 1987 Policy, and 1988 Policy use the word Assured instead of Insured. 13

17 Union s or Illinois National s consent. The 1985 Policy, 1986 Policy, 1987 Policy, 1989 Policy, and 1990 Policy provide: The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for first aid to other at the time of accident. The 1991 Policy, 1992 Policy, 1993 Policy, 1994 Policy, 1995 Policy, 1996 Policy, 1997 Policy, 1998 Policy, 1999 Policy and 2000 Policy provide: No insureds will, except at their own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent. NATIONAL UNION S AND ILLINOIS NATIONAL S RESERVATIONS OF RIGHTS 43. In July 2009, the City Defendants tendered their defense and indemnity in the Underlying Lawsuit to National Union based on the Diocese Defendants purported contractual obligations to procure insurance and/or indemnify the City Defendants. 44. In letters dated September 4, 2009, October 8, 2009, and February 8, 2010, National Union and Illinois National agreed to defend the City under a full reservation of all rights with respect to coverage for the City Defendants for the Underlying Lawsuit under the Primary Policies. 45. In letters dated September 4, 2009 and August 23, 2010 National Union and Illinois National agreed to defend the Diocese Defendants under a full reservation of all rights with respect to coverage for the Diocese Defendants for the Underlying Lawsuit under the Primary Policies. 46. In November 2010, National Union, Illinois National, and the Diocese Defendants entered into an Interim Funding/Non-Waiver Agreement relative to the Underlying Lawsuit. Under the Interim Funding/Non-Waiver Agreement, National Union and Illinois National agreed to advance to the Diocese Defendants and/or the City Defendants certain amounts to defend and/or settle the Underlying Lawsuit, subject to a mutual reservation of rights and National Union s and Illinois National s right to recoup from the Diocese and/or the Diocese Defendants any amounts advanced if it was later determined that those amounts were not owed under the Primary Policies. 14

18 AS AND FOR PLAINTIFFS FIRST CAUSE OF ACTION AS AGAINST CITY DEFENDANTS (Declaratory Judgment Voluntary Payment) 47. National Union and Illinois National repeat the allegations of Paragraphs 1-46 as though fully set forth herein. 48. The City Defendants voluntarily entered into the $9.7 million total settlement of the claims against them in the Underlying Lawsuit without National Union s and Illinois National s consent. Accordingly, the City Defendants $9.7 million total settlement of the claims against them in the Underlying Lawsuit is at their own cost and not subject to coverage under the Primary Policies. 49. Wherefore, National Union and Illinois National are entitled to a declaration that they have no duty to indemnify the City Defendants for the $9.7 million total settlement of the claims against them in the Underlying Lawsuit because the City Defendants negotiated that settlement without National Union s and Illinois National s consent. 50. An actual controversy exists in this regard. 51. National Union and Illinois National have no adequate remedy at law. AS AND FOR PLAINTIFFS SECOND CAUSE OF ACTION AS AGAINST CITY DEFENDANTS (Declaratory Judgment No Coverage for L.J. and J.G.) 52. National Union and Illinois National repeat the allegations of Paragraphs 1-51 as though fully set forth herein. 53. Upon information and belief, $6 million of the City Defendants $9.7 million total settlement of the claims against them in the Underlying Lawsuit was allocated to the claims asserted by or on behalf of L.J. and J.G. 54. The Diocese Defendants were not alleged to have had any role in the placement of L.J. and J.G with Leekin. Moreover, by way of Order dated January 28, 2014, all claims asserted by or on behalf of L.J. and J.G. were dismissed from the Underlying Lawsuit as to the Diocese Defendants. Accordingly, the City Defendants liability to those two Claimants did not arise with respect to operations by the Diocese 15

19 Defendants, and therefore, the City Defendants do not qualify as Insureds under the Primary Policies with respect to any liability to L.J. and J.G. 55. An actual controversy exists in this regard. 56. National Union and Illinois National have no adequate remedy at law. 57. Wherefore, National Union and Illinois National are entitled to a declaration that they had no duty to defend or indemnify the City Defendants with respect to the portion of their liability and defense costs in the Underlying Lawsuit that is allocated to the claims asserted by L.J. and J.G. AS AND FOR PLAINTIFFS THIRD CAUSE OF ACTION AS AGAINST ALL DEFENDANTS (Declaratory Judgment Trigger and Allocation) 58. National Union and Illinois National repeat the allegations of Paragraphs 1-57 as though fully set forth herein. 59. To the extent the Underlying Lawsuit sought to hold the Diocese Defendants and the City Defendants liable for damages because of bodily injury, the Primary Policies only potentially apply to provide coverage to the Diocese Defendants and the City Defendants for damages because of bodily injury that took place during the each of the Primary Policies policy periods. 60. The Underlying Lawsuit sought to hold the Diocese Defendants and the City Defendants liable for damages because of bodily injury that took place between May 9, 1986, when S.B. was placed with Leekin as a foster child, and July 10, 2007, when the last of all ten of the Claimants were removed from Leekin s custody in Florida. 61. Because the Underlying Lawsuit involved potential damages because of bodily injury that took place between May 9, 1986 and July 10, 2007, the Diocese Defendants and the City Defendants potential liability to each of the Claimants in the Underlying Lawsuit must be allocated pro rata across this period of time. Therefore, all defense costs and indemnity for the Underlying Lawsuit must be allocated across whichever of the Primary Policies, NCRRG Primary Policies, National Union Umbrella Policies, International Umbrella Policies, Westchester Umbrella Policies, and NCRRG Umbrella Policies 16

20 were in effect when each of the Claimants suffered bodily injury, as well as any annual periods during which the Diocese and/or the Diocese Defendants were self-insured. 62. Additionally, coverage for any damages because of bodily injury suffered by each of the Claimants that is allocated to each of the Primary Policies applies in excess of a $250,000 selfinsured retention (SIR) that applies per occurrence. 63. Thus, National Union and Illinois National owe no obligation to the Diocese Defendants or the City Defendants under the Primary Policies concerning any individual Claimant s alleged injuries unless and until the Diocese exhausts a $250,000 SIR for each occurrence, as well as an allocated portion of the Diocese Defendants and the City Defendants defense fees and costs, in each period of the Primary Policies where that Claimant suffered bodily injury for which the Diocese Defendants and the City Defendants were potentially liable. 64. An actual controversy exists in this regard. 65. National Union and Illinois National have no adequate remedy at law. 66. Wherefore, National Union and Illinois National are entitled to a declaration that: a. any damages because of bodily injury in the Underlying Lawsuit, and any corresponding defense fees and costs related thereto, must be allocated pro rata across the entire applicable period of potential damages, including any annual periods during which the Diocese and/or the Diocese Defendants were self-insured; and b. they have no duty to defend or indemnify the Diocese Defendants and the City Defendants concerning any individual Claimant s alleged injuries unless and until the Diocese exhausts a $250,000 SIR for each occurrence, as well as an allocated portion of the Diocese Defendants and the City Defendants defense fees and costs, in each period of the Primary Policies where that Claimant suffered bodily injury for which the Diocese Defendants and the City Defendants were potentially liable. 17

21 AS AND FOR PLAINTIFFS FOURTH CAUSE OF ACTION AS AGAINST ALL DEFENDANTS (Declaratory Judgment Number of Occurrences) 67. National Union and Illinois National repeat the allegations of Paragraphs 1-66 as though fully set forth herein. 68. The Underlying Lawsuit sought to hold the Diocese Defendants and the City Defendants liable for injuries taking place during the various annual periods of the Primary Policies. As a result, the Underlying Lawsuit involved at least one occurrence under each of the Primary Policies in effect when the Claimants suffered bodily injury for which the Diocese Defendants and the City Defendants were potentially liable. 69. Thus, National Union and Illinois National owe no obligation to the Diocese Defendants or the City Defendants under the Primary Policies concerning any individual Claimant s alleged injuries unless and until the Diocese exhausts a $250,000 SIR for each occurrence, as well as an allocated portion of the Diocese Defendants and the City Defendants defense fees and costs, in each period of the Primary Policies where that Claimant suffered bodily injury for which the Diocese Defendants and the City Defendants were potentially liable. 70. An actual controversy exists in this regard. 71. National Union and Illinois National have no adequate remedy at law. 72. Wherefore, National Union and Illinois National are entitled to a declaration that they have no duty to defend or indemnify the Diocese Defendants concerning any individual Claimant s alleged injuries unless and until the Diocese exhausts a $250,000 SIR for each occurrence, as well as an allocated portion of the Diocese Defendants and the City Defendants defense fees and costs, in each period of the Primary Policies where that Claimant suffered bodily injury for which the Diocese Defendants and the City Defendants were potentially liable. 18

22 AS AND FOR PLAINTIFFS FIFTH CAUSE OF ACTION AS AGAINST ALL DEFENDANTS (Declaratory Judgment Professional Services Exclusion) 73. National Union and Illinois National repeat the allegations of Paragraphs 1-72 as though fully set forth herein. 74. The Professional Services exclusion in each of the Primary Policies other than the 1985 Policy applies to preclude coverage when the insured s liability is due to the rendering or failure to render any professional service. 75. The Diocese Defendants and the City Defendants liability in the Underlying Lawsuit is due to their provision of professional services, including foster care and adoption placement services and related child welfare services. 76. Because the Diocese Defendants and the City Defendants liability in the Underlying Lawsuit is due to the rendering or failure to render professional services, the Professional Services Exclusion contained in each of the Primary Policies other than the 1985 Policy applies to preclude coverage for the Diocese Defendants and the City Defendants. 77. An actual controversy exists in this regard. 78. National Union and Illinois National have no adequate remedy at law. 79. Wherefore, National Union and Illinois National are entitled to a declaration that they have no duty to defend or indemnify the Diocese Defendants and the City Defendants for the Underlying Lawsuit under each of the Primary Policies other than the 1985 Policy. AS AND FOR PLAINTIFFS SIXTH CAUSE OF ACTION AS AGAINST DIOCESE AND DIOCESE DEFENDANTS (Declaratory Judgment -- Reimbursement) 80. National Union and Illinois National repeat the allegations of Paragraphs 1-79 as though fully set forth herein. 81. Under the Interim Funding/Non-Waiver Agreement the Diocese Defendants and/or the Diocese agreed to repay any amounts advanced by National Union and Illinois National to the Diocese 19

23 Defendants and the City Defendants if a court determined that those amounts were either not covered under the Primary Policies or within the Diocese s and/or the Diocese Defendants SIR obligations under the Primary Policies. 82. National Union and Illinois National have advanced approximately $7 million to defend both the Diocese Defendants and the City Defendants against the Underlying Lawsuit, and additionally agreed to advance $17.5 million to settle the claims against the Diocese Defendants in the Underlying Lawsuit. 83. The sums advanced by National Union and Illinois National were either not covered under the Primary Policies or fell within the Diocese s and/or the Diocese Defendants SIR obligations under the Primary Policies. 84. An actual controversy exists in this regard. 85. National Union and Illinois National have no adequate remedy at law. 86. Wherefore, National Union and Illinois National are entitled to a declaration that the Interim Funding/Non-Waiver Agreement obligates the Diocese and/or the Diocese Defendants to repay National Union and Illinois National for sums advanced by National Union and Illinois National that were either not covered under the Primary Policies or within the Diocese s and/or the Diocese Defendants SIR obligations under the Primary Policies, and a money judgment against the Diocese and/or the Diocese Defendants for that amount. AS AND FOR PLAINTIFFS SEVENTH CAUSE OF ACTION AS AGAINST DIOCESE, DIOCESE DEFENDANTS AND NCRRG (Declaratory Judgment, Unjust Enrichment, Equitable Subrogation and Contribution) 87. National Union and Illinois National repeat the allegations of Paragraphs 1-86 as though fully set forth herein. 88. NCRRG is obligated by the terms and conditions of the NCRRG Primary and Umbrella Policies to pay on behalf of the Diocese, the Diocese Defendants, and/or the City Defendants the portion of the Diocese s, the Diocese Defendants, and the City Defendants defense costs and indemnity for the Underlying Lawsuit that is allocable to the annual periods of the NCRRG Primary and Umbrella Policies. 20

24 89. National Union and Illinois National have advanced approximately $7 million to defend both the Diocese Defendants and the City Defendants against the Underlying Lawsuit, and additionally agreed to advance $17.5 million to settle the claims against the Diocese Defendants in the Underlying Lawsuit. 90. The $7 million in defense costs and $17.5 million in settlement advanced by National Union and Illinois National were comprised, in part, of sums allocable to the annual periods of the NCRRG Primary and Umbrella Policies because each of those policies was in effect when each of the Claimants suffered bodily injury. 91. The $7 million in defense costs and $17.5 million in settlement advanced by National Union and Illinois National was also comprised, in part, of defense costs and indemnity allocable to the August 31, 2006 to August 31, 2007 time period when the Diocese was either self-insured or insured by NCRRG. 92. National Union and Illinois National agreed to advance the $17.5 million payment to settle the claims against the Diocese Defendants in the Underlying Lawsuit at a mediation that took place on June 12 and 13, Representatives of the Diocese and the Diocese Defendants attended the mediation, but did not contribute any sums toward the settlement of the claims against the Diocese Defendants in the Underlying Lawsuit. 93. The sums advanced by National Union and Illinois National fully discharged the Diocese s and/or the Diocese Defendants liability or potential liability to the Claimants, as well as the Diocese s and/or the Diocese Defendants liability or potential liability to pay the City Defendants defense costs in the Underlying Lawsuit. 94. National Union and Illinois National advanced the sums referenced above under compulsion because the Diocese, the Diocese Defendants, and/or NCRRG refused to pay those sums and/or to protect the interests of the Diocese and/or the Diocese Defendants. 95. To the extent the sums advanced by National Union and Illinois National were either not covered under the Primary Policies or within the Diocese s and/or the Diocese Defendants SIR obligations under the Primary Policies and/or any Diocese self-insurance, or within NCRRG s 21

25 obligations under the NCRRG Primary and Umbrella Policies, the Diocese, the Diocese Defendants, and/or NCRRG were liable to pay those sums, and are therefore liable to reimburse National Union and Illinois National for those sums. 96. The Diocese and Diocese Defendants have obtained an unjust benefit at National Union s and Illinois National s behalf, and will continue to do so. 97. An actual controversy exists in this regard. 98. National Union and Illinois National have no adequate remedy at law. 99. WHEREFORE, as a matter of equity and good conscience, National Union and Illinois National are entitled to judgment against the Diocese, the Diocese Defendants, and/or NCRRG for all sums advanced by National Union and Illinois National that were either not covered under the Primary Policies or within the Diocese s and/or the Diocese Defendants SIR obligations under the Primary Policies and/or any Diocese self-insurance, or within NCRRG s obligations under the NCRRG Primary and Umbrella Policies. AS AND FOR PLAINTIFFS EIGHTH CAUSE OF ACTION AS AGAINST WESTCHESTER (Declaratory Judgment, Unjust Enrichment, Equitable Subrogation and Contribution) 100. National Union and Illinois National repeat the allegations of Paragraphs 1-99 as though fully set forth herein Westchester is obligated by the terms and conditions of the International Umbrella Policies and the Westchester Umbrella Policies to pay on behalf of the Diocese, the Diocese Defendants, and/or the City Defendants that part of the sums incurred to settle the claims against the Diocese Defendants and/or the City Defendants in the Underlying Lawsuit that is excess of the total applicable limits of the Primary Policies National Union and Illinois National have agreed to fund a $17.5 million payment to settle the claims against the Diocese Defendants in the Underlying Lawsuit, and while denying any obligation to do so, may be required to pay sums to indemnify the City Defendants for a portion of the $9.7 million total 22

26 settlement of the claims against them in the Underlying Lawsuit National Union and Illinois National agreed to fund the $17.5 million payment to settle the claims against the Diocese Defendants in the Underlying Lawsuit at a mediation that took place on June 12 and 13, Upon information and belief, Westchester was advised of both the mediation and earlier settlement discussions, but did not attend the mediation, participate in settlement discussions, or contribute any sums toward the settlement of the claims against the Diocese Defendants in the Underlying Lawsuit To the extent the sums incurred to settle the claims against the Diocese Defendants and/or the City Defendants in the Underlying Lawsuit are not allocated across all sixteen (16) annual periods of the Primary Policies, the annual periods of the NCRRG Primary and Umbrella Policies, and/or any annual periods during which the Diocese and/or the Diocese Defendants were self-insured, and/or to the extent the sums incurred to settle the claims against the Diocese Defendants and/or the City Defendants in the Underlying Lawsuit involve only one occurrence per policy period, the sums that National Union and Illinois National have paid or will pay in connection with the settlements of the Underlying Lawsuit may be within the coverage obligations owed by Westchester under the terms and conditions of the International Umbrella Policies and the Westchester Umbrella Policies The sums advanced by National Union and Illinois National fully discharged the Diocese s and/or the Diocese Defendants liability or potential liability to the Claimants in the Underlying Lawsuit To the extent the sums advanced by National Union and Illinois National were within the coverage obligations owed by Westchester under the terms and conditions of the International Umbrella Policies and the Westchester Umbrella Policies, National Union and Illinois National advanced the sums referenced above under compulsion because Westchester declined to participate in settlement discussions, contribute any sums toward the settlement of the claims against the Diocese Defendants in the Underlying Lawsuit and/or to protect the interests of the Diocese and/or the Diocese Defendants To the extent the sums advanced by National Union and Illinois National were within the coverage obligations owed by Westchester under the terms and conditions of the International Umbrella 23

27 Policies and the Westchester Umbrella Policies, Westchester is liable to pay those sums, and is therefore liable to reimburse National Union and Illinois National for those sums An actual controversy exists in this regard National Union and Illinois National have no adequate remedy at law As a matter of equity and good conscience, National Union and Illinois National are entitled to judgment against Westchester for all sums advanced by National Union and Illinois National that were within the coverage obligations owed by Westchester under the terms and conditions of the International Umbrella Policies and the Westchester Umbrella Policies. WHEREFORE, Plaintiffs National Union Fire Insurance Company of Pittsburgh, Pa. and Illinois National Insurance Company pray for judgment in their favor and against the Defendants, the Roman Catholic Diocese of Brooklyn, City of New York, Administration for Children s Services f/k/a Child Welfare Administration, St. Joseph Services for Children, Inc. f/k/a Catholic Child Care Society of the Diocese of Brooklyn, Inc., Heart Share Human Services of New York,. Roman Catholic Diocese of Brooklyn f/k/a Catholic Guardian Society of the Diocese of Brooklyn, Inc., SCO Family of Services f/k/a St. Christopher-Ottilie, and The National Catholic Risk Retention Group, Inc. as follows: (a) A declaration that National Union and Illinois National have no duty to indemnify the City Defendants for the $9.7 million total settlement of the claims against them in the Underlying Lawsuit because the City Defendants negotiated that settlement without National Union s and Illinois National s consent; (b) A declaration that National Union and Illinois National had no duty to defend or indemnify the City Defendants with respect to the portion of their liability and defense costs in the Underlying Lawsuit that is allocated to the claims asserted by 24

28 L.J. and J.G.; (c) A declaration that any damages because of bodily injury in the Underlying Lawsuit, and any corresponding defense fees and costs related thereto, must be allocated pro rata across the entire applicable period of potential damages, including any annual periods during which the Diocese and/or the Diocese Defendants were self-insured and/or covered under the NCRRG Primary and Umbrella Policies; (d) A declaration that National Union and Illinois National have no duty to defend or indemnify the Diocese Defendants and the City Defendants concerning any individual Claimant s alleged injuries under the Primary Policies unless and until the Diocese exhausts a $250,000 SIR for each occurrence, as well as an allocated portion of the Diocese Defendants and the City Defendants defense fees and costs, in each period of the Primary Policies where that Claimant suffered bodily injury for which the Diocese Defendants and the City Defendants were potentially liable; (e) A declaration that the Professional Services Exclusion contained in each of the Primary Policies other than the 1985 Policy applies to preclude coverage for the Diocese Defendants for the Underlying Lawsuit; (f) A declaration that the Interim Funding/Non-Waiver Agreement obligates the Diocese and/or the Diocese Defendants to repay National Union and Illinois National for sums advanced by National Union and Illinois National that were either not covered under the Primary Policies or within the Diocese s and/or the Diocese Defendants SIR obligations under the Primary Policies; (g) A judgment against the Diocese, the Diocese Defendants, and/or NCRRG for all 25